IMF says Turkey policy on track

The Turkish central bank has injected $3.83 billion into the interbank market to offest a liquidity crunch in a move which has stretched the limits of a $4.0 billion standby agreement with the fund."...following this injection, the net domestic assets of the central bank are being gradually brought back into line with the quarterly framework specified in the program," the IMF statement said.

Under the terms of the agreement, the central bank's net domestic assets cannot rise by more than the level of capital inflows. The IMF, which will meet in the third week of December to consider Turkey's policies, said the Turkish authorities had introduced a "significantly more disciplined approach to banking supervision".

It said Turkey had suffered from external shocks which had boosted the current account deficit and that the government had taken measures to rein in domestic demand. The measures include increasing the level of the primary surplus, new tax legislation and privatisation. "In sum, the program is on track, and it is expected to remain so given the authorities' strong policies for 2001," IMF deputy managing director Stanley Fischer said.